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Commercial real estate is a lesser known investment strategy. Despite this, it can provide financial stability and diversification in a portfolio. Due to its lower popularity than traditional real estate invest, there are many questions that remain in the minds of potential investors which can dissuade them from entering this sector of investing. That is why the following lost of three tips for real estate investors has been created. The tips, in no particular order, is as follows:

Have A Large Down Payment Available
Take Note Of Usable Square Footage
Mitigate Investment Risks
Have A Large Down Payment Available

Commercial real estate differs from more traditional real estate in that it can require a much larger down payment in order to receive financing on a loan. Some more traditional home loans require only up to a five percent down payment and at times require no down payment at all. Commercial real estate on the other hand can require up to 35% down on a property to receive financing from a qualified lender. This may require more savings up front but can pay greater returns in the long term.

Take Note Of Usable Square Footage

A second not to be made when considering commercial real estate is how it is valued. A single family home, for example, is valued based on the house plus the land it sits on. This means that even a small house that sits on a great deal of land can be very expensive. Conversely, commercial real estate is valued solely based on the usable square footage of the building. This is because this is what determines how many tenants can be in the building and thus determines the potential monthly revenue that it can generate for the investor.

Mitigate Investment Risks

One of the most important aspects of investing is minimizing risk through diversification. Commercial real estate give investors the opportunity to collect rent from multiple tenants instead of a single tenant in a rental home. This way, if a tenant decides to move operations elsewhere, it is only a partial loss to revenue as opposed to losing all rental revenue if a single family decides to move.

Commercial real estate, once demystified, is an extremely viable investment strategy. By becoming an informed consumer, investors can best put capital to work.